Human Resources and Skills Development Canada (HRSDC) has announced the benefit rates for the Canada Pension Plan (CPP) and Old Age Security (OAS), effective Jan. 1, 2012.
CPP benefits will increase by 2.8 per cent for those already receiving CPP benefits. CPP benefits are revised once a year, in January. The revisions are based on changes over a 12-month period (November 2010 to October 2011) in the consumer price index (CPI), which is the cost-of-living measure used by Statistics Canada.
The maximum CPP retirement benefit for new recipients will increase from $960 to $986.67 per month. This increase is calculated based on the average yearly maximum pensionable earnings for the last five years.
The new CPP rates will be in effect until Dec. 31, 2012.
The basic OAS pension, the Guaranteed Income Supplement and the Allowances will increase by 0.4 per cent.
These payments are also based on the CPI but are reviewed quarterly (in January, April, July and October) and are revised as required to reflect increases in the cost of living as measured by the CPI. The maximum basic OAS pension will increase from $537.97 to $540.12 per month.
The Guaranteed Income Supplement (GIS) and the Allowances provide additional income to low-income pensioners, their spouses or common-law partners, and eligible survivors. Since July 1, 2011, these beneficiaries also receive a GIS and Allowances top-up benefit of up to $600 for single seniors and $840 for couples per year. This top-up will also be indexed and is included in the GIS and the Allowances rate.
Although OAS and CPP benefits are not indexed at the same time, they are both adjusted with the cost of living over a given year.
© Copyright Canadian HR Reporter, Thomson Reuters Canada Limited. All rights reserved.